Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2023

Schedule of Liability for Future Policy Benefit

The following table summarizes balances and changes in the LFPB.


	2023		2022
(In millions)

Present value of future net premiums
Balance, January 1	$	3,993	$	4,735
Effect of changes in discount rate	(74)		(880)
Balance, January 1, at original locked in discount rate	3,919		3,855
Effect of changes in cash flow assumptions (a)
Effect of actual variances from expected experience (a)	(49)		(18)
Adjusted balance, January 1	3,870		3,837
Interest accrual	52		53
Net premiums: earned during period	(111)		(112)
Balance, end of period at original locked in discount rate	3,811		3,778
Effect of changes in discount rate	154		525
Balance, March 31	$	3,965	$	4,303

Present value of future benefits & expenses
Balance, January 1	$	17,472	$	22,745
Effect of changes in discount rate	(125)		(5,942)
Balance, January 1, at original locked in discount rate	17,347		16,803
Effect of changes in cash flow assumptions (a)
Effect of actual variances from expected experience (a)	(50)		(23)
Adjusted balance, January 1	17,297		16,780
Interest accrual	242		241
Benefit & expense payments	(302)		(233)
Balance, end of period at original locked in discount rate	17,237		16,788
Effect of changes in discount rate	704		3,517
Balance, March 31	$	17,941	$	20,305


Net LFPB	$	13,976	$	16,002


(a)			As of March 31, 2023 and 2022, the re-measurement gain of $1 million and $5 million presented parenthetically on the Consolidated Condensed Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.

The following table presents undiscounted expected future benefit and expense payments and undiscounted expected future gross premiums.


Three Months Ended March 31	2023		2022
(In millions)

Expected future benefit and expense payments	$	33,759	$	33,674
Expected future gross premiums	5,729		5,969

The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.


	March 31,				December 31,
	2023		2022		2022


Original locked in discount rate	5.26	%	5.31	%	5.27	%
Upper-medium grade fixed income instrument discount rate	4.92		3.67		5.23

Schedule of Accounting Standards Update

The following table presents a roll-forward of the pre-transition LFPB balance as of January 1, 2021:



(In millions)

Balance as of December 31, 2020, as reported	$	13,318
Reclassification of reserves for policyholders currently receiving benefits to Future policy benefits (a)	2,844
De-recognition of shadow reserves	(3,293)
Re-measurement using an upper-medium grade fixed income instrument yield discount rate	6,255
Other adjustments	8
Balance as of January 1, 2021, as adjusted	$	19,132


(a)			In conjunction with the adoption of ASU 2018-12, at January 1, 2023, the long term care reserves for policyholders currently receiving benefits were reclassified from Claim and claim adjustment expense to Future policy benefits. This change was applied retrospectively as of January 1, 2021.

The following table presents after tax adjustments to the opening balance of Shareholders’ equity and Noncontrolling interests resulting from adoption of ASU 2018-12:


	Accumulated other comprehensive income (loss)		Retained earnings		Noncontrolling interests
(In millions)

Balance as of December 31, 2020, as reported	$	581	$	14,150	$	1,321
De-recognition of shadow reserves	2,331				270
Re-measurement of LFPB using an upper-medium grade fixed income instrument yield discount rate	(4,428)				(513)
Other adjustments			(5)		(1)
Balance as of January 1, 2021, as adjusted	$	(1,516)	$	14,145	$	1,077

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statement of Operations were as follows:


Three Months Ended March 31, 2022	As Reported		Effect of Adoption		As Adjusted
(In millions)

Insurance claims and policyholders’ benefits (a)	$	1,455	$	23	$	1,478
Income before income tax	462		(23)		439
Income tax expense	(92)		5		(87)
Net income	370		(18)		352
Amounts attributable to noncontrolling interests	(32)		2		(30)
Net income attributable to Loews Corporation	338		(16)		322
Basic net income per share	1.36		(0.06)		1.30
Diluted net income per share	1.36		(0.07)		1.29


(a)			The effect of adopting ASU 2018-12 on Insurance claims and policyholders’ benefits is inclusive of the re-measurement gain of $5 million, which is presented parenthetically on the Consolidated Condensed Statement of Operations.

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Balance Sheet were as follows:


December 31, 2022	As Reported		Effect of Adoption		As Adjusted
(In millions)

Other assets	$	3,941	$	73	$	4,014
Total assets	75,494		73		75,567
Claim and claim adjustment expenses (a)	25,099		(2,979)		22,120
Future policy benefits (a)	10,151		3,329		13,480
Total liabilities	60,016		350		60,366
Retained earnings	15,144		(213)		14,931
Accumulated other comprehensive income (loss)	(3,284)		(36)		(3,320)
Noncontrolling interests	880		(28)		852
Total equity	15,478		(277)		15,201


(a)			In conjunction with the adoption of ASU 2018-12, at January 1, 2023, the long term care reserves for policyholders currently receiving benefits were reclassified from Claim and claim adjustment expense to Future policy benefits. This change was applied retrospectively as of January 1, 2021.

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statement of Comprehensive Income (Loss) were as follows:


Three Months Ended March 31, 2022	As Reported		Effect of Adoption		As Adjusted
(In millions)

Changes in: Net unrealized losses on other investments	$	(1,611)	$	(1,032)	$	(2,643)
Total unrealized losses on investments	(1,615)		(1,032)		(2,647)
Impact of changes in discount rates used to measure long-duration contract liabilities			1,635		1,635
Other comprehensive loss	(1,605)		603		(1,002)
Comprehensive loss	(1,235)		585		(650)
Amounts attributable to noncontrolling interests	136		(60)		76
Total comprehensive loss attributable to Loews Corporation	(1,099)		525		(574)

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statements of Cash Flows were as follows:


Three Months Ended March 31, 2022	As Reported		Effect of Adoption		As Adjusted
(In millions)

Net income	$	370	$	(18)	$	352
Adjustments to reconcile net income to net cash provided by operating activities, net	333		(5)		328
Changes in: Insurance reserves	489		23		512

The effects of adoption of ASU 2018-12 on segment results of operations of CNA were as follows:


Three Months Ended March 31, 2022	As Reported		Effect of Adoption		As Adjusted
(In millions)

Insurance claims and policyholders’ benefits (a)	$	1,455	$	23	$	1,478
Income before income tax	378		(23)		355
Income tax expense	(65)		5		(60)
Net income	313		(18)		295
Amounts attributable to noncontrolling interests	(32)		2		(30)
Net income attributable to Loews Corporation	281		(16)		265


(a)			The effect of adopting ASU 2018-12 on Insurance claims and policyholders’ benefits is inclusive of the re-measurement gain of $5 million, which is presented parenthetically on the Consolidated Condensed Statement of Operations.